THE LOGISTICS BLOG

Reliability is the quality of being trustworthy or of performing consistently well. Shippers and Manufacturers demand and need consistent, reliable service from their service providers. It’s a critical component of vendor hiring (and firing) as an unreliable service partner can cost their business partners thousands of dollars in fines, damages and losses. Eventually, customers dealing with unreliable service partners will change – even if the other service partner has a higher rate but less disruptions. In other words, supply chain reliability is a core metric for performance, quality and price.

To improve your reliability and provide high quality service takes diligence, process, and root cause analysis. At Triskele Logistics, we have tried and true processes to improve your reliability. We focus on reliability because it reduces your operating costs and should increase your revenue (a reliable service provider can charge for quality). Errors in your supply chain are non-value added activities that can cost a company a sizeable portion of their profitability.

The process components are:

Track the Issues that Happen as they Happen

Using a really simple tracking method like the one attached, you will want to track the issues that your customer and your supply chain team are noticing. It’s important to track both Customer and Internal issues. Often, internal issues are customer issues that are either being handled well (so no customer call) or are early warning signs of a possible customer problem. Track the date, time, type of issue, customer, product, and the reason for the issue in a spreadsheet (or on a piece of paper – but get it captured!). Common issues we’ve seen are: overage, shortage, damage, paperwork issues (missing, not signed, incorrect), delay / late arrival due to weather, road closure, motor vehicle accident, delay in loading, delay in shipping (and it goes on)…

Identify the Root Cause of the Issue

Follow the issue from time of occurrence all the way from the customer order being placed to the time that the error occurred. Don’t skip steps or assume you know the answer until you are 100% certain that you know the reason for the issue. Often there are multiple points in the process that have failed, and you want to know each one. As an example, if a customer received incorrect product – did they order it correctly? Did the order get keyed correctly? Did the system process the order properly? What information got transmitted to the warehouse or picker? Did someone double check the pick before shipping? Did the driver of the truck check the pallet before it got loaded? Did the customer check the product when they received it? Did they sign their Bill of Lading (BOL)?

Review the Issues Weekly and Categorize Them

Taking the data from your spreadsheet and ask the following questions:

How many times has a particular issue occurred?

How many times has a type of issue occurred?

Are the issues happening to the same customer or different customers?

What are the root causes of the issue?

As you look at the data, it will highlight any themes or common problem areas. Often, you will see patterns across a department, customer, service provider or employee.

Once You Know the Root Cause of the Issue, Find out Why its Happening

It’s easy to point fingers and blame each other for a problem but it’s much harder to have a consistent constructive conversation about why something is happening. Don’t blame the person, vendor, or system. Blame is not constructive. Instead ask why something is happening? Is it a system, training, communication, or a process issue? Is it an awareness issue? Or did someone make a decision without fully understanding what the upstream and downstream impacts are? We go to work every day to do the best possible job we can. Most of us go to work to do a great job – to achieve something – to feel good about our capabilities. We don’t go to work to mess things up – but we do from time to time and it’s important to understand why.

Identify the Full Cost of the Issue

It’s really important to fully understand the cost of an issue. As an example, an incorrectly keyed order has activity costs such as: order entry clerk time, picking time, shipping time, transportation costs, customer receiving costs, reverse logistics costs, re-stocking costs, inventory loss to name a few. Once you’ve identified those costs, it highlights the reason why we want to stop the issue from happening. An issue can eliminate any profitability from a sale (or erode it significantly). Knowing the cost of the issue at hand and providing the data to the team is a change agent, it creates a compelling call to action that highlights why change is needed.

Brainstorm Ways to Fix the Issue

Once you know the root cause of the issue, pull the team together. Pull together customer service, sales, operations, supply chain. Engage anyone who touches the process that is broken. Whether it’s a system issue or a process or person issue, it’s important to have an open, honest and constructive conversation about what happened. And more importantly it’s important to ask everyone their ideas and thoughts on how to fix it. What steps or changes can be made to prevent the issue? What’s possible? What’s not? Don’t get put off by change resistance. The answer is not “we leave it the way it is”. The answer is – let’s make this problem go away for good – what has to be done to prevent this issue from happening ever again.

Implement a Process Adjustment

Once the team agrees on the best path forward, document the new process and communicate it to the team. Give them time to read it, and then, pull the team together to a) review the process in person and b) get an agreement for compliance. People won’t read your email unless you make them accountable, we are all so busy that reading a process document is not high on the priority list. If you hold a meeting to review the process (make it an hour or less) then people will read and review as they go. As soon as everyone agrees to the process, you can implement the most important part of any change process - accountability.

Enforce Accountability and Process Compliance

If we want to embed change then we need to hold people accountable to following the new process. Otherwise the issue will just come back once you take your finger off of it. There needs to be consequences to not complying to a process. Performance rewards (for positive compliance), performance consequences (for non-compliance), in writing, in person, and if necessary as part of formal performance reviews. People need to know that you mean business and that non-compliance is not optional. It’s required.

It’s not easy to follow this process, but it can be done and it’s worth it. Over the years, just by increasing reliability in an operation, Triskele Logistics has been able to save our clients an average of 10% of their operating expenses – just by eliminating errors.